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A Time to Remember The Most Significant Industry Changes Over the Last 20 Years 1. Production facilities 2. Genetics 3. Nutrition 4. Industry structure 5. Export markets 6. Regulation 7. Disease challenges 8. Consumer mind-set 9. Activist groups 10. New Technology Breed to wean facilities • Breeding • Gestation • Farrowing • Unit size • Pig flow Wean to Finish •Feeder design • Crate design • Flooring • Ventilation • Manure handling • Supplemental heat • Controls and data reporting Integrating Design and Technology •Sort barns • Large pen design • Double wide • Quad barns • Bio-Security and pig flow • Remote control and recording of: •Ventilation, water, feed, temperature, pig activity The Most Significant Industry Changes Over the Last 20 Years 1. Production facilities 2. Genetics 3. Nutrition 4. Industry structure 5. Export markets 6. Regulation 7. Disease challenges 8. Consumer mind-set 9. Activist groups 10. New Technology Genetic Changes • Sow Productivity • Longevity • Piglet growth rate in lactation • Growth Rates • Feed conversion • Carcass composition • Lean gain and conversion • Uniformity • Pork Quality • Heat tolerance/seasonal consistency • Target end weights The Most Significant Industry Changes Over the Last 20 Years 1. Production facilities 2. Genetics 3. Nutrition 4. Industry structure 5. Export markets 6. Regulation 7. Disease challenges 8. Consumer mind-set 9. Activist groups 10. New Technology Delivering Nutrition • Ingredient options • Nutrient requirements • Barrows, gilts, boars • Lean growth rates • Seasonal variation • Manure composition considerations • Micro nutrients • Feed additives • Feed budgets • Nursery • Finishing • Sows • Manufacturing • Delivery of feed • Performance targets • Profitability targets The Most Significant Industry Changes Over the Last 20 Years 1. Production facilities 2. Genetics 3. Nutrition 4. Industry structure 5. Export markets 6. Regulation 7. Disease challenges 8. Consumer mind-set 9. Activist groups 10. New Technology Table 1. Top 30 US Pork Production Companies Rank NAME OF OPERATION 1 Smithfield Foods 922,251 Est Market Pigs 18,445,020 2 3 4 5 6 7 Seaboard Foods Christensen Farms Iowa Select Farms The Pipestone System The Maschhoffs Prestage Farms 213,600 162,500 152,500 132,000 130,000 125,000 4,272,000 3,250,000 3,050,000 2,640,000 2,600,000 2,500,000 Mkt Cummulative Packers Share Mkt Share 17.6% Smithfield, Farmland, 17.6% John Morrell 4.1% 21.6% Seaboard 3.1% 24.7% Triumph, JBS Swift 2.9% 27.6% JBS Swift 2.5% 30.1% JBS Swift, Tyson 2.5% 32.6% Cargill, Hormel Smithfield, Farmland, 2.4% 35.0% John Morrell, JBS Swift 8 Cargill 116,000 2,320,000 2.2% 9 10 11 12 Carthage System AMVC Management Hanor Maxwell Foods (Goldsboro) Hormel Foods (M2P2) PST Progressive Swine Technologies Tyson Foods New Fashion Pork Country View Family Farms Nebraska Pork Partners 85,000 82,000 80,000 69,000 1,700,000 1,640,000 1,600,000 1,380,000 1.6% 1.6% 1.5% 1.3% 54,000 53,200 1,080,000 1,064,000 1.0% 1.0% 52,000 48,000 46,500 1,040,000 960,000 930,000 1.0% 0.9% 0.9% 44,500 890,000 0.8% 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Wakefield Holden Farms Texas Farms TriOak Foods Schwartz Farms M2P2 Swine Graphics Hog Slat (TDM) Garland Farm Supply Eichelberger Farms JC (Carolina) Howard Hitch Pork Total SOWS 40,500 810,000 40,000 800,000 40,000 800,000 35,000 700,000 30,000 600,000 27,400 548,000 24,100 482,000 23,000 460,000 23,000 460,000 23,000 460,000 22,000 440,000 15,000 300,000 2,951,051 59,021,020 0.8% 0.8% 0.8% 0.7% 0.6% 0.5% 0.5% 0.4% 0.4% 0.4% 0.4% 0.3% 55.4% States IA, MO, AK, OK, MN IL, IA, IN, MO IA, MN, SD, NE IL, WI, OK, TX, NC 43.2% 44.3% Cargill Cargill, Triumph Hormel, Tyson Triumph, Seaboard Smithfield, Indiana Packers Hormel 45.3% 46.3% 47.2% Tyson Tyson Triumph NE, IA AK, OK, MO, IN MN, SD, IA 48.1% Hatfield PA, OH, IN 48.9% 49.7% 50.4% 51.2% 51.9% 52.4% 53.0% 53.4% 53.9% 54.3% 54.7% 55.2% 55.4% Smithfield (Farmland) JBS Swift Tyson Tyson Cargill JBS Swift Hormel Tyson Indiana Packers Smithfield Triumph Smithfield Seaboard NE, IA MN MN TX, IA IA, IL MN IA, CO, OK, NC IA NC, IN NC, SC, KS, IA IA NC OK 37.2% 38.8% 40.4% 41.9% NC, VA, IA, MO, OK, TX, CO, UT OK, TX, KS, CO MN, SD, NE, IA IA, MN IL, IA, IN, MO NC, MS, IA NC, IN AZ, IA, MN Table 3: Top 10 US Pork Packers and Processors 1 2 3 4 5 6 7 8 9 10 NAME OF OPERATION Smithfield Foods Plants Mkt Share 9 Annual Harvest 30,942,000 Tyson Foods JBS Swift Cargill Meat Solutions Hormel Seaboard Triumph Foods Indiana Packers Hatfield Quality Meats 6 3 2 18,798,000 11,960,000 9,360,000 18% 11% 9% 3 1 1 1 1 9,568,000 4,100,000 4,100,000 3,900,000 2,600,000 9% 4% 4% 4% 2% Routh Packing Total 1 900,000 1% 28 96,228,000 92% 29% The Most Significant Industry Changes Over the Last 20 Years 1. Production facilities 2. Genetics 3. Nutrition 4. Industry structure 5. Export markets 6. Regulation 7. Disease challenges 8. Consumer mind-set 9. Activist groups 10. New Technology The Most Significant Industry Changes Over the Last 20 Years 1. Production facilities 2. Genetics 3. Nutrition 4. Industry structure 5. Export markets 6. Regulation 7. Disease challenges 8. Consumer mind-set 9. Activist groups 10. New Technology Pork Industry Regulation • • • • • • • Waste handling Air quality Worker safety Animal welfare Antibiotic use Free trade ID – COOL The Most Significant Industry Changes Over the Last 20 Years 1. Production facilities 2. Genetics 3. Nutrition 4. Industry structure 5. Export markets 6. Regulation 7. Disease challenges 8. Consumer mind-set 9. Activist groups 10. New Technology Nursery Disease Challenges -20 years ago - Today NAHMS - USDA NAHMS - USDA Wean to Finish Disease Challenges -20 years ago - Today NAHMS - USDA NAHMS - USDA Common Practices NAHMS - USDA The Most Significant Industry Changes Over the Last 20 Years 1. Production facilities 2. Genetics 3. Nutrition 4. Industry structure 5. Export markets 6. Regulation 7. Disease challenges 8. Consumer mind-set 9. Activist groups 10. New Technology Consumer Demand Consumer Spending In terms of in store profitability, pork segments are key Profit per pound advantage vs. average meatcase item 154% 103% 71% 63% 47% 29% 25% 13% Pork Value Added Pork Tenderloins Chicken Value Added Beef Value Added 26 Source: National Pork Board Retail Composite Database 2005 Beef Steaks Bonless Pork Chops Ground Beef Boneless Chicken Breasts Consumer Spending Bacon accounts for nearly half of all pork items on menus Distribution of menued pork items at same operators Pepperon i Breakfast Sausage 8.2% Sausage 7% Ribs 2.3 % 12.9% Pork Chops, Loins, Tenders 4.1% Bacon 46.2% 28 Source: MenuMine 2005 Ham (Sliced, Unsliced) 19.2% The Most Significant Industry Changes Over the Last 20 Years 1. Production facilities 2. Genetics 3. Nutrition 4. Industry structure 5. Export markets 6. Regulation 7. Disease challenges 8. Consumer mind-set 9. Activist groups 10. New Technology The Most Significant Industry Changes Over the Last 20 Years 1. Production facilities 2. Genetics 3. Nutrition 4. Industry structure 5. Export markets 6. Regulation 7. Disease challenges 8. Consumer mind-set 9. Activist groups 10. New Technology New Technology 20 Years Ago A time to remember • 1990 - ??? – Plasma for nursery diets – Synthetic amino acids – Vaccines? – Medication? – Split sex feeding – Genetics – Production Systems - SEW What Technology is Needed? • Top needs…….. • Biggest gaps……. • Biggest opportunities……. • Records and data systems • Health challenges • Nutrition • Genetics • New targets Thank you!